Tuesday, December 28, 2010

Back in 2005, when investing in real estate still seemed like a good idea, we put down a deposit on a condominium at the new Cosmopolitan Resort and Casino. At the time, the Cosmo was a vacant lot sandwiched between the Bellagio and the new CityCenter development on the Las Vegas Strip.

The project has had numerous difficulties, not least of which were a foreclosure by its main creditor, Deutshche Bank, and a class-action lawsuit which was settled out of court last year. The upshot of the settlement was that most of the buyers of the 2000 or so condo units were released from their contracts and had their deposits partially refunded. We decided to opt out of the settlement because it seemed like a bad deal. With so many buyers released from their contract, we figured one of three things had to happen.

The first possibility was that the units would be allowed to sit empty until the real estate market improved. That seemed pretty unlikely.

The second possibility was that the units would be put back on the market, in which case we figured we might be able to renegotiate our purchase price. If they were trying to sell condos in the current climate, a happy customer would be worth a lot more to them than the difference between our contract price and current fair market values, especially a happy customer who wrote a blog.

The third possibility was that the units would not be put back on the market, but would instead be turned into hotel rooms. This is what ultimately happened. Instead of 2000 condos and 1000 hotel rooms, the Cosmo now has 200 condos (under contract to the people who opted out of the class action settlement) and 2800 hotel rooms.

There was a clause in the purchase contract that allowed us to unilaterally pull out of the deal if there were "material and adverse" changes to the building's floor plan. The change from 2000 condos to 200 certainly seemed "material and adverse" to us, so we sent a letter to the Cosmo notifying them that we were electing to terminate.

We were hoping that the Cosmo's response would be an offer to renegotiate the purchase price. We actually wanted the condo, we just didn't want to pay a height-of-the-bubble price for it if we could avoid it. But instead of negotiating, they decided instead to sic their lawyers on us. We received a letter not from the Cosmo, but from the law offices of Snell and Wilmer, saying:

This law firm represents Nevada Property 1 LLC, the owner and seller under your contract to purchase a condominium hotel unit in The Cosmopolitan of Las Vegas. We received your ... letter terminating your contract. However, we disagree with the premise of your termination, as there have been no material or adverse changes to the subdivision map. To the contrary, the final subdivision map reflects a project very much the same as reflected in the provisional subdivision map. Accordingly, your termination is without basis and is a default under section ... of your contract. You have 20 days from receipt of this letter to cure your default. If you fail to do so, we will proceed in accordance with your contract [and confiscate your security deposit].

That seemed a little harsh considering that our unit was not even scheduled to be completed until the middle of next year.

The notice of default backed us into a corner. We had to respond to it, so we had to consult with a lawyer. Happily, we were referred to a lawyer who was already representing a bunch of the remaining condo buyers in a new lawsuit against the Cosmo. The case was strong enough that he was prosecuting the case on contingency. Among the long list of documents that he had amassed in the case was a letter from a fellow named Matthew L. Lalli, one of the Cosmo's lawyers at Snell and Wilmer, and one of the people cc'd on the notice of default they had sent us. This letter read:

... [the contract] does not impose any contractual obligation on [the Cosmo] to record a final map with any particular details or requirements... It merely gives the buyer the option to terminate the contract if he/she believes the final map differs materially and adversely from the provisional map. [Emphasis added.]

I think Mr. Lalli's gonna have some 'splainin' to do. :-)

Frankly, I don't see how any reasonable person could argue that changing a project from 2/3 condo and 1/3 hotel to 7% condo and 93% hotel is not a material and adverse change. But it is becoming apparent that the Cosmo is not dealing in good faith. I can't help but wonder, though, what they think the end game is going to be here.

Monday, December 27, 2010

Kenji Yoshino at Slate is still mixing it up with Princeton's Robert George over the issue of gay marriage. George, you may recall, is the Princeton professor who published an article in a scholarly journal arguing against gay marriage on the grounds that reproduction is necessarily part-and-parcel of any "real" (his word, not mine) marriage.

Yoshino's response is valiant and mostly well argued by scholarly standards, but I can't help but wonder why he chooses to dance around the slam-dunk refutation of George:

... it might surprise many couples who cannot have children (or choose not to do so) that the validity of their marriage rests on its "orientation" toward procreation.

Why the parenthetical? Why not go straight for the jugular? It is precisely the heterosexual couples who choose not to have children that are the inarguable refutation of George's position. No need to quibble over whether homosexual orientation is a choice or not: people who undergo surgical sterilization are indisputably choosing a "lifestyle" that is incompatible with reproduction. Not only that, but there can be no dispute that they are making this choice deliberately and with the express purpose of thwarting reproduction, as opposed to homosexuals, for whom the obstacles to reproduction are arguably in some cases merely a side-effect of the actual objective.

There is no possible way to argue for the invalidity of gay marriage on the grounds that marriage is inextricably bound to reproduction without taking the position that people who have voluntarily sterilized themselves are not entitled to marry. That's it, the whole megillah, period, end of story. The fact that not a single sane person would be willing to take that position reveals George's argument as just another instance of thinly disguised bigotry against gays.

What is harder to understand is why left-leaning scholars like Yoshino relegate this argument to parentheticals instead of putting it front-and-center where it belongs. Instead, Yoshino takes his eye off the ball and allows himself to get drawn into a quagmire of quibbling over sports analogies. I really don't get it.

Thursday, December 23, 2010

A while back I blogged about my personal mystification at what appeared to be an instance of the placebo effect at work even though I knew that it was a placebo. In my case, I had some medicine prescribed and I filled the prescription, but my condition improved before I actually took any of the medicine. Now a new study indicates that this might not have been a fluke. The LA Times reports that Placebos work, even when patients are in the know, study finds.

Thursday, December 16, 2010

Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.

Suddenly, the existence of Fox News makes a lot more sense. Rupert Murdoch and his cronies have apparently been studying their history.

UPDATE: This seemed relevant to contemporary life as well:

1945: Although the war is the largest tragedy in human history, the United States emerges as the world's only economic superpower. Deficit spending has resulted in a national debt 123 percent the size of the GDP. By contrast, in 1994, the $4.7 trillion national debt will be only 70 percent of the GDP!

The top tax rate is 91 percent. It will stay at least 88 percent until 1963, when it is lowered to 70 percent. During this time, America will experience the greatest economic boom it has ever known.

Wednesday, December 15, 2010

The U.S. government, specifically the Department of Homeland Security, is shutting down music blogs, ostensibly because of piracy, by seizing their domain names. No warnings, and more importantly, no warrants. Not even any charges!

David Snead, a lawyer specializing in Internet cases who is representing the owner of torrent-finder.com, speculated that it might be 30 to 60 days before he would be able to see a seizure order. “The government is providing zero information to help us determine what he is being charged with,” he said. “It’s a black hole.”

I would like to be able to say that a more blatant disregard for the fundamental principles that this country is supposed to stand for is hard to imagine, but alas, that would be untrue.

Tuesday, December 14, 2010

It's articles like this that help me to understand why conservatives often have problems with academia.

In the article, we argue that as a moral reality, marriage is the union of a man and a woman who make a permanent and exclusive commitment to each other of the type that is naturally fulfilled by bearing and rearing children together, and renewed by acts that constitute the behavioral part of the process of reproduction.

In other words, gays should not be allowed to marry because to have a "real marriage" (those aren't scare quotes -- the authors actually use that term in the paper) you have to make kids, or at least go through the motions.

To form a real marriage, a couple needs to establish and live out the kind of union that would be completed by, and be apt for, procreation and child‐rearing.53 Since any true and honor‐ able harmony between two people has value in itself (not merely as a means), each such comprehensive union of two people—each permanent, exclusive commitment sealed by organic bodily union—certainly does as well.

Any act of organic bodily union can seal a marriage, whether or not it causes conception.

How fortunate for infertile heterosexual couples. But what about people who choose not to have children and implement that choice with artificial birth control? Should they too be barred from getting married?

Funnily enough, the paper doesn't address that question. It also doesn't address the question of whether, say, a couple that puts their child up for adoption should have their marriage annulled.

This paper appears in the Harvard Journal of Law & Public Policy an apparently respectable academic journal. I am not impressed by their standards of scholarship. (I am, however, impressed by their euphemisms. "Organic bodily union" has got to be the most highfalutin' way I've ever heard of saying "fuck.")

Monday, December 13, 2010

...although images can be made at the exposure levels claimed (under 100 nanoGrey per view), detection of contraband can be foiled in these systems. Because front and back views are obtained, low Z materials can only be reliable detected if they are packed outside the sides of the body or with hard edges, while high Z materials are well seen when placed in front or back of the body, but not to the sides. Even if exposure were to be increased significantly, normal anatomy would make a dangerous amount of plastic explosive with tapered edges difficult if not impossible to detect.

"Their [the city's] lawyers basically said the city was going to file for forfeiture," Kinnally [the men's lawyer] said. "The judge asked on what basis. The lawyer said, 'We don't know,' and the judge said: 'This is America. Give it back.'"

The judge ordered the city to return the $190,040, along with a month's interest and costs. But Kinnally said that when he brought the order to Aurora, the city refused to turn over the cash, saying it planned to appeal the judge's order.

And if that's not enough to get your hackles up, it now appears that the federal government has decided to help themselves to the loot:

Aurora's legal department has not responded to requests for information. And it now appears that the city no longer has the cash.

Jesus Martinez received a certified letter last weekend from U.S. Customs and Border Protection. Dated Dec. 2, the letter states the Department of Homeland Security/Immigrations and Customs Enforcement seized the money from Aurora, and that the cash is subject to forfeiture under U.S. codes dealing with drug transactions.

Seriously, the difference between the government and an organized crime organization has become quite difficult for my admittedly unschooled eye to discern.

I consider myself (mostly) a liberal, but I don't feel like a winner here. The left may have won, but the country has definitely lost. What both sides seem to have lost sight of is that the U.S. is rapidly careening towards national bankruptcy, and while $75B worth of extra revenue from rich people will not make much of a dent in a trillion-dollar deficit or a multi-trillion-dollar debt, it is worrisome that despite lofty rhetoric, neither the left nor the right seems to be taking the problem seriously. We are in a deep, deep hole, and this compromise just digs us in deeper.

What has just happened is rather like a married couple in deep debt arguing over whether they should cut their vacation or buying a new car. They compromise by deciding to go on vacation and buy a new car and charge it all to their already overloaded credit card. Maybe both sides feel like they've won, but as one of the people who is ultimately on the hook for paying the credit card bill, it doesn't make me feel any better. And you shouldn't either, because even if you don't live here I guarantee you will feel the pain if the U.S. goes under.

Lesley Hazleton gives an amazing and apparently well informed talk about the Quran from the point of view of a non-Muslim (she is a self-described "secular Jewess"). If you are at all interested in learning more about Islam, watching this video will be ten minutes well spent.

Wednesday, December 08, 2010

Just happened to stumble across this little gem, apparently by Larry Wohlgemuth:

WHERE SHALL WE HIDE THE SPIRIT OF GOD?

“Where shall we hide the Spirit of God from people?” the gods all cried when they were made.“How can we guard our secret now?” they asked each other so afraid.

“Hide our Spirit in the earth and they will mine it.Hide it on a mountain and they will climb it.Even in the sea they will find it.Where, oh where, shall we hide the Spirit of God from people?”

“Hide our Spirit in the wind and they will pursue it.Hide it in an atom and they will view it.Even in an act they will do it.Where, of where, shall we hide the Spirit of God from people?”

They thought of stars in outer space or in the nature of a tree,but they knew that people could solve each and every mystery.

“Hide our Spirit in matter and they will analyze it.Hide it in water and they will crystallize it.Even in hell they will surmise it.Where, oh where, shall we hide the Spirit of God from people?”

And then they solved the puzzle of how the frightened gods should win.The wisest said, “Let us take the Spirit of God and hide it deep inside of them.”

“Hide our Spirit in their heart and they will doubt it.Hide our Spirit in their very soul and they will live without it.Even if we reveal it and shout it,they will never, never believe that the Spirit of God is deep inside of them.”

Sunday, December 05, 2010

Our elected representatives seem to have this all figured out. Instead of cutting spending and raising taxes to close the budget deficit and avoid bankruptcy, they are going to keep the Bush tax cuts and extend unemployment benefits, in other words, cut taxes and raise spending. Yeah, that'll work.

I don't like to predict doom and gloom. A lot of people have lost a lot of money short-selling the United States. But if there's a trajectory that is going to avoid national bankruptcy at this point, I don't see it. If raising taxes even on the very wealthiest is politically untenable then what's going to give instead? Defense? Social security? Medicaid? Good luck with those. Everything else (except interest on the debt of course) is lost in the noise. Grow our way out of this? How? I keep hearing pundits pinning their hopes on somehow "getting the banks to ease credit so the American consumer can start buying again." That makes no sense to me at all. We're not going to "grow" our way out of this mess by increasing the rate at which we buy Chinese televisions, or the rate at which we allow Wall Street bankers to rip off homebuyers and investors, or the rate at which we invest in copycat internet startups at inflated valuations.

Maybe we can make money selling predator drones to the rest of the world, but I'm not sure that's such a good idea in the long run.

Gotta love this quote:

"Sen. John Kerry (D-Mass.) said President Obama was 'not caving'' by considering an extension of the tax cuts for all income levels."

If that's "not caving" I really have to wonder what caving would look like.

Bad news for Science (the journal) and science (the enterprise) and NASA too. What appears to me to be a very well informed review of the recent NASA claims of having grown bacteria that substitute arsenic for phosphorus in their biomolecules concludes: "Bottom line: Lots of flim-flam, but very little reliable information."

The FBI installed an informant in a mosque posing as a jahadist. The members of the mosque were so alarmed by this person that they reported him to the FBI.

I had always considered that we might have more to fear form our own government than from Islamic extremists as an abstract possibility, but I never really took it seriously before reading this. Makes me really wonder about the case against Mohamed Osman Mohamud too. This incident lends credence to the theory that Mohamud was entrapped. It would, apparently, not be the first time.

Don Geddis sent me the previoius post in an email and I asked him to post it here because I think he's on the right track, but not quite there. In particular:

God doesn't care about humans, and God is not benevolent.

and I hope he'll forgive me for lifting this from his original email:

Doesn't make much of a comforting myth,

Darwinian evolution indeed is not much of a comforting myth. I think that's one of the reasons it doesn't get more traction. Happily, Darwinian evolution is not all there is. Evolution is just one layer in a hierarchy of phenomena, some of which do care about humans, and some of which are benevolent. It just so happens that the phenomena that are benevolent and care about us are not the same ones that created us. They are us (and in some cases, our pets).

It is noted among Biblical scholars from time to time that an ambiguity in Hebrew grammar allows Genesis 1:1 ("Bereshith barah Elohim et ha shmayim ve et haaretz.") to be properly translated not as "IN the beginning..." but rather "The Beginning created God, the heavens and the Earth." A properly poetic but still scientifically tenable creation myth might then go something like this: The Beginning created Physics, which created evolution (which is nothing like physics), which created DNA (which is nothing like evolution), which created humans (which are nothing like DNA), which recently created computers, which are (so far) nothing like humans. It is truly a grand and glorious scheme of things, of which intelligence is only a small (but disproportionately interesting) part. If we use the shorthand "God" to mean the totality of creation at all levels of abstraction (c.f. Raymond Smullyan), then to call God intelligent is an insult to God.

We can even co-opt a passage from Isaiah: "I form the light and create darkness, I bring prosperity and create disaster; I, the multiverse, do all these things." (I've taken another small liberty with the translation here.)

[NOTE: This was posted by Don. But I think he's on the right track track -- ed.]

For thousands of years, people have observed the world, and concluded that God must have created humans. One of the strongest arguments -- quite rightly -- is that you can't get the complexity of a human being just by random chance. As Hoyle said,

The chance that higher life forms might have emerged in this way is comparable to the chance that a tornado sweeping through a junkyard might assemble a Boeing 747 from the materials therein.

That intuition is exactly right. And you don't solve it just by saying "it takes a lot of time". Yes, millions or billions of years is a far longer time than most people can comfortably think about ... but just having lots and lots of tornadoes still doesn't get you a 747 from the junkyard.

You need something, besides just random chance, to get the complexity of modern life. And it's traditional to call that something, "God". As Yudkowsky has noted, many of the characteristics traditionally ascribed to God are in fact true:

The Shaper of Life is not itself a creature. [It] is bodiless [...]. Omnipresent in Nature, immanent in the fall of every leaf. Vast as a planet's surface. Billions of years old. Itself unmade, arising naturally from the structure of physics.

Of course, some guesses (or wishes and hopes and dreams) about the nature of God turned out not to be true. Man was not made in God's image. The universe was not made "for" humans. Humans are not the purpose of God's creation. In fact, God doesn't really have a "purpose", as such. Most important, God doesn't care about humans, and God is not benevolent.

But make no mistake: God is there. A powerful force, designing all life that we see around us. After thousands of years of searching, God was found. Darwin found it. Alas, most religious folks were unable to -- or refused to -- recognize God when it was found.

Tuesday, November 30, 2010

(Because it appears that this piece might be getting some attention, please note that all of the work in this blog is copyrighted. Feel free to link to it, but please do not reproduce it without permission.)

A: I don't. I don't like paying more in taxes any more than the next person. But we have a stark choice before us: we can either raise taxes, or we can cut spending, or we can go the way of Greece and Iceland. All else being equal I would like to see us balance our budget by cutting spending, but I don't think that's going to happen. The Republicans were in charge for eight years, with control of both houses of Congress and the White House, and they oversaw the biggest expansion of government spending since F.D.R. And do I really need to explain why I'm not optimistic about the Democrats doing any better?

Q: If you feel this strongly about it, why don't you just write the government a check?

A: Because that won't do any good. The government is not a charity. It cannot and should not be run like one. Running a country is a team sport. The problems we are facing are too big for any one individual -- or even any group of individuals -- to fix alone. Whatever we do, we have to do it together.

Q: 45% (or something like that) of low-income individuals pay no federal income tax at all. In fact, they get money back from the government in the form of the earned income tax credit. Shouldn't we ask those people to do their fair share before we punish rich people for working hard and being successful?

A: Two answers. First, just because someone pays no federal income tax does not mean that they pay no taxes. Most wage earners pay payroll (social security) tax, medicare tax, and, if they buy stuff, sales tax. If they own a home they probably pay property tax too. So this idea that they are not doing their fair share because they don't pay "income tax" is, at best, playing games with terminology to obfuscate the truth. The problems we are facing are much too serious to tolerate that kind of semantic gamesmanship.

Second, we have to get beyond this argument about what is fair. Life isn't fair. Working hard improves your odds of getting rich, but whether you hit it or not has as much to do with luck (and your willingness to be ruthless and bend the rules) as it does with honest hard work. So fairness doesn't even enter into the equation. This is a practical question: we have to dig ourselves out of a very deep hole. It makes sense that we should ask those who are able to contribute more to do so.

Q: Doesn't it make more sense to let rich people keep their money so they can invest it and create jobs so we can grow the economy and get ourselves out of debt that way?

A: No, for two reasons. First, rich people are the result of a robust economy, not the cause. The United States is proof of this. The United States did not become the world's leading economic power because the rich elites of the world came here and invested. It became an economic power because it had conditions that attracted capable, hard-working but mostly poor (at first) people. "Give me your tired, your poor..." is not just an aphorism, it's the formula that led the U.S. to its heights of power. And what distinguished the United States at the height of its economic power was not that it had a huge cadre of rich elites that drove the economy, but that it had a robust and growing middle class. Whichever way the causality runs, it is indisputable that the country was stronger when the wealth was spread wide rather than piled high.

Second, you don't need rich people to drive investment, you need capital. Rich people are a source of capital, but they are not the only source, and they are not the best source. Institutional investors like university endowments and pension funds drive vastly more investment than high net worth individuals, and that is a very good thing because those institutions have broader fiduciary duties than individuals do, and so are more likely to invest in enterprises that benefit society as a whole rather than narrow individual interests.

Q: Won't taxing high income remove the incentive for hard work and risk taking?

A: No (though removing some of the inventive for taking certain kinds of risks might not be such a bad idea). Again, all we have to do to show this is to look at history. For most of the last 100 years, the marginal tax rate on the highest income brackets has been above 80%. In particular, in the 30 years after world war 2, when the U.S. was arguably at the height of its economic power, the top marginal tax rate was 91%. By way of contrast, in 1925 the top marginal rate was lowered from 46% to 25%. Four years later the stock market crashed. We've done this experiment before. I see no reason to believe we won't get the same results the second time around.

Q: Do you consider people who disagree with you unpatriotic?

No. Patriotism is not a zero-sum game.

[UPDATE:] Just got a new one:

Q: Why don't you just fire your accountant?

A: Huh?

Q: You rich people have accountants so that you can find loopholes in the tax laws so you don't have to pay taxes. Why don't you just fire your accountant so that you can't find those loopholes and end up paying more taxes? (Or something like that. The question seemed a little incoherent when it was posed to me. I suspect something got lost in the translation between corporate overlord and junior reporter. But here's the answer I gave.)

A: I don't know about other rich people, but trying to weasel my way out of paying taxes is not why I have an accountant. The reason I have an accountant is that the tax code is so complicated that I can't do my taxes any other way. Hiring an accountant is the only way I can figure out what I actually owe.

Wednesday, November 24, 2010

The fallout from the mortgage mess may be quite far from playing itself out. In fact, we may well not have seen the worst of it yet. CNBC reports that when Bank of America bought Countrywide, they did not get possession of the paperwork for Countrywide's loans. When BofA issued mortgage-backed securities based on those loans they were essentially (if perhaps unwittingly) committing fraud by selling securities backed by legal documents that they didn't actually have.

Morgenson continues, in rather measured tones, considering the apparent ramifications of the statement:

"If Countrywide’s practice was to hold onto the note, then investors in this pool and others may question whether the security was constructed properly and legally and may be able to require Bank of America to buy back their securities."

If you like speculating, this seems like a good time to buy put options on BofA.

I just had a very interesting experience. I appeared as a guest on the Lou Dobbs radio show (with Dom Giordano pinch-hitting for Lou) to talk about my being a signatory to a letter to president Obama from an organization called Patriotic Millionaires for Fiscal Strength asking him to allow the Bush tax cuts to expire on people making over a million dollars a year, a group which at one time I was a member of and hope to join again some day. I was told that the interview would last about eight minutes, but Dom shut it down after about two or three, I guess because he thought I was winning the argument. It wasn't hard to do. All he had were the usual conservative talking points, all of which are easily refuted. I did learn a few things though.

1. Conservative talk radio hosts really are not at all interested in hearing conflicting views. They are especially not interested in hearing conflicting views backed up by actual facts. The last point I was able to make before Dom cut me off was that if you look at history, in the forties and fifties, a time period when the United States was arguably at the peak of its strength, the marginal tax rates on top income earners was 91%. If you look at the period immediately preceding the Great Depression, those rates were 25%. A clearer demonstration of the long-term folly of lowering taxes on rich people is hard to imagine.

2. A good way to make conservatives squirm is to adopt their rhetorical devices. For example, conservatives love to bring up the specter of communism. I was able to turn the tables on Dom by talking instead about how running a country is a "team sport," and how everyone has to contribute to the team. I was even able to sneak in a passage from Marx himself without Dom noticing by talking about how everyone had to contribute to the team "according to their abilities": You don't take the little guy and make him a linebacker. (My favorite part of the interview was when Dom, sensing that I was not going to give him an opening to play the communist card, decided to play it anyway by saying, "I'm not one to bring up communism, but..." I interrupted him saying, "But you just did." He didn't seem to like me much after that.

3. I'm pretty happy with the answer I gave to the question of why I don't just donate more money to the government. It's a no-brainer: because the government should not be run like a charity. Running a country is a team sport. There are rules. We have a process called democracy by which we make the rules. Right now the rules are not working and we need to change them.

4. The one point I wish I'd been a little better prepared for was the bit about "punishing" rich people for being successful. It's my fault because I knew it was in their playbook, but I didn't really have a quick comeback prepared for it. But if I had, it would have been something like, "Why do you call it punishment? There are some parts of being a grown up that are not fun but that you have to do anyway, like paying your taxes so that we can have good infrastructure and a strong military."

I don't know if there's audio of the interview available or not. I've asked the Lou Dobbs show to give me a copy, but I'd be surprised if they grant the request. They probably don't want audio of Dom getting his butt kicked making the rounds. Next time I'll have to remember to record it myself.

Monday, November 22, 2010

Nearly two-thirds of Americans support the new full-body security-screening machines at the country's airports, as most say they put higher priority on combating terrorism than protecting personal privacy.

Sunday, November 21, 2010

Representative John A. Boehner, soon to be the Speaker of the House, has pledged to fly commercial airlines back to his home district in Ohio. But that does not mean that he will be subjected to the hassles of ordinary passengers, including the controversial security pat-downs.

As he left Washington on Friday, Mr. Boehner headed across the Potomac River to Reagan National Airport, which was bustling with afternoon travelers. But there was no waiting in line for Mr. Boehner, who was escorted around the metal detectors and body scanners, and taken directly to the gate.

...

“Over the last 20 years, I have flown back and forth to my district on a commercial aircraft,” Mr. Boehner said at the time, “and I am going to continue to do that.”

And so on Friday, he did. But not without the perquisites of office, including avoiding those security pat-downs that many travelers are bracing for as holiday travel season approaches.

This is the best part:

Michael Steel, a spokesman for the Republican leader, said in a statement that Mr. Boehner was not receiving special treatment.

Amazing how much disruption a simple question like that can cause. Written by an ex-cop, and worth reading all the way through, but here's a nugget:

What happened to me in Albany was not the promised “pat-down.” It was a full search conducted in full public view. It was also one of the most flawed searches I have ever witnessed.

From the outset, it was very clear that the screener would have preferred to be anywhere else. She acted as if she was afraid of me, though given that I had set myself apart as apparently crazy, perhaps I cannot blame her. With rubber-gloved hands she checked my head, my arms, my legs, my buttocks (and discovered a pen that had fallen into one of my pockets) and even the bottom of my feet. Perhaps in a nod to decorum, she did not check my crotch, my armpits or either breast area.

Here was a big problem: an effective search cannot nod to decorum.

Emphasis added. That is the nub of the matter. Either we do searches that cannot be circumvented, or we maintain our freedom and our dignity. We cannot do both. We must choose.

Saturday, November 20, 2010

I've often wondered if people would be less inclined to give the Catholic Church a pass on sexually molesting children if someone managed to get some surreptitious video. Well, it looks like I'm going to find out. It's the TSA and not the Catholic Church, and it's just a strip search and not rape, but there is video. Warning: it's quite disturbing.

... condoms are not a moral solution to stopping AIDS. [No surprise there -- ed.] But ... in some cases, such as for male prostitutes, [emphasis added] their use could represent a first step in assuming moral responsibility “in the intention of reducing the risk of infection.”

Benedict made the comment in response to a general question about Africa, where heterosexual HIV spread is rampant.

He used as a specific example male prostitutes, for whom contraception is not usually an issue, but did not mention married couples where one spouse is infected.

Let me see if I have this straight: as long as the man is being paid, then using a condom is a "step in assuming moral responsibility" (presumably a good thing) but under any other circumstances using a condom is still a mortal sin.

So... if the wife pays her husband to use condoms does that make it OK?

President Obama said today he sympathizes with passenger complaints about aggressive body pat-downs at airports, but his counter-terrorism aides say they are necessary to guard against hidden explosives.

Balancing privacy and security is a "tough situation," Obama told reporters at a news conference following the NATO summit in Lisbon, Portugal.

"One of the most frustrating aspects of this fight against terrorism is that it has created a whole security apparatus around us that causes a huge inconvenience for all of us," Obama said.

Obama cited the attempted airplane attack by the so-called underwear bomber last Christmas as justification for aggressive security measures.

How did we ever manage to lose our perspective so completely? Yes, it's true, aggressive screening is necessary to guard against hidden explosives. But when did we concede that it is necessary to guard against hidden explosives with no consideration of the cost? Cars kill 40,000 people a year in the U.S. but that's a price we're willing to pay for the freedom cars provide. Guns (sorry, people wielding guns) kill somewhere north of 10,000 (with the war on drugs playing no small role) but inconveniencing people even a little (like forcing them to undergo a background check) to get that toll down is a political non-starter, as is legalizing drugs. So why are we so willing to allow ourselves to be ogled and groped -- and, more to the point, allow our children to be ogled and groped -- to address a hypothetical problem that has never actually killed anyone? If someone wants to create terror, wouldn't it be a lot easier to hide a bomb in a truck and blow up a shopping mall? Or Times Square?

Yes, it's possible that someone could smuggle an explosive in their underwear (again). But it's also possible that someone will smuggle an explosive onto an airplane in their rectum, so body cavity searches are also "necessary to guard against hidden explosives." Just because something is "necessary to guard against hidden explosives" doesn't mean we should do it.

We could blow up a 747 every week and still not come close to kill the number of people who die from cigarettes. So why aren't we banning tobacco?

Here's a theory: tobacco makes money for powerful people. So do cars. So do drugs as long as they are illegal. And so do X-ray machines. Among the people making money off X-ray machines is Michael Chertoff, former head of the department of homeland security. The government's maddeningly hypocritical approach to risk management starts to make a lot more sense on the theory that the quality metric is not safety, but something else altogether.

Once you ... understand what took place in Jefferson County, there's really no room left for illusions. We live in a gangster state, and our days of laughing at other countries are over. It's our turn to get laughed at. In Birmingham, lots of people have gone to jail for the crime: More than 20 local officials and businessmen have been convicted of corruption in federal court. Last October ... Birmingham's mayor was convicted of fraud and money-laundering for taking bribes funneled to him by Wall Street bankers — everything from Rolex watches to Ferragamo suits to cash. But those who greenlighted the bribes and profited most from the scam remain largely untouched.

...

That such a blatant violation of anti-trust laws took place and neither JP Morgan nor Goldman have been prosecuted for it is yet another mystery of the current financial crisis. "This is an open-and-shut case of anti-competitive behavior," says Taylor, the former regulator.

Friday, November 12, 2010

The story I'm about to tell you happened about two years ago, just as the first rumblings of the housing crisis were beginning to be heard. I distinctly remember listening to a story about the problem, then largely speculative, on Marketplace. One line from that show still echoes in my mind: the host, Kai Ryssdal, asked his guest, "So how bad is it really?" The guest responded, "No one knows." Later that day I called my broker and had him sell a bunch of stock. But I digress.

About that time I was on the receiving end of a wire transfer of a pretty substantial sum, well into six figures. I was having the money wired into a brokerage account, which is more complicated than wiring money into a checking or savings account. To wire money into a brokerage account, the money is wired into a bank account owned by the brokerage firm with a notation that the money should then be credited to a particular client. It's called an FBO (For Benefit Of) transaction.

The bank from which the money was being sent shall remain nameless, but it was (and still is) one of the biggest banks in the country, with a universally recognized brand. This bank had a reputation for being conservative. Some banks will accept wire instructions via phone or email, but this one required that the client present themselves in person so they can fill out and sign a form. I had provided the person sending me the money with a copy of the wire instructions that were provided to me by my broker.

Wire transfers are supposed to be same-day transactions, but by close of business the money still had not arrived in my account. I was told that this happens some times and not to worry. Two days later, the money was still MIA. Forensics revealed that the wire form had been filled out incorrectly. Instead of being filled out as an FBO transaction, it had instead been filled out as if it were a regular wire transfer using an intermediary bank. Moreover, it was immediately obvious that this was the case because an essentially random number had been filled in as the intermediary bank's ABA routing number. It didn't even have the right number of digits. Nonetheless, the wire transfer proceeded. The money left the sender's account and went... somewhere. Where it was, no one could say.

Yes, I know it is hard to believe, but it's true. The money was missing for two weeks, during which time no one at the sending bank knew where it was, or even, apparently, had any way of finding out. The only reason that the money was found was that I got a call from a befuddled accountant from the bank where my brokerage firm held its accounts saying that they suddenly had a few hundred thousand dollars in one of their accounts that they didn't know where it came from. The money had apparently been wired to the correct institution somehow, but to a completely random account. Even after the mess got straightened out no one could figure out how the money ended up where it did. Or if they did, they wouldn't tell me.

The shocking thing about this to me at the time was how fragile the system was, and how difficult it was to recover from errors. I thought then that this was surely a six-sigma event, but now I'm not so sure. If the person who received the money had not been so diligent in tracking down its source I'm not sure it would ever have been found. And after reading about how the banks are playing fast and loose with foreclosures and mostly not getting called out on it I can't help but wonder if money doesn't get lost on a regular basis and we just don't hear about it. I used to think that there was someone minding the store, and that the system had checks and balances in it to make sure that this kind of thing couldn't happen. I'm not so sure any more.

Since then I've been trying to get more information about how our financial system really works in terms of the mechanics of moving money around between financial institutions but it turns out to be incredibly difficult to find anyone who really understands it. Bankers in particular don't seem to have a clue. I've spoken to CEOs and CTOs of banks and they have no idea how the system works. I know it sounds crazy, but it's true. Maybe the bigger banks have their own IT departments, but the smaller banks get their software from third-party providers, and the people procuring and operating it have no idea how it works under the hood. Or if they do, they won't tell me.

Well, yes, apparently it can. Matt Taibbi at Rolling Stone has a blistering expose about the foreclosure mess. It's long, but worth reading all the way through. It's really quite shocking, and not just because of the magnitude of the problem. The entire system seems to be breaking down in ways that would have been completely unimaginable twenty years ago. If what Taibbi reports is true (and I see no reason to doubt it) it would not be hyperbolic to say that the banking system in the United States has become an organized crime organization, aided and abetted by the government.

Tuesday, November 09, 2010

I refer here not to the brain-eating horror-movie staple but rather philosophical zombies, beings that are "indistinguishable from ... normal human[s] except that [they] lack conscious experience, qualia, or sentience." Here is a fascinating account of Tom Lubbock, an art critic with a brain tumor that occasionally renders him essentially a philosophical zombie:

My speech is now becoming a radical problem. Sometimes, for a short period, and suddenly, I find that I no longer know what I am saying, but I still go on talking and talking sense – like an inspired sibyl or a medium. The voice works automatically, fluently, subconsciously, through habit or practice. The words would need to be looked up, if I could recognise their spelling. But I can feel at least that my speaking is correct and I am aware that my words and phrases are familiar and appropriate.

Likewise, I can hear others' words and accept them as meaningful, without being able to repeat or paraphrase or interpret their meaning, though I can perhaps reply sensibly or at least act sensibly in reply. At a particular subconscious level, speech is functioning. Consciously, I can't spell some words, I don't know what they mean, I can't recite their phonemes. All I can recognise is the phatic role of my words, their tone.

To explain. One can have quite extended conversations more or less on autopilot.

Monday, November 08, 2010

There is a dent on the floor of my office where my jaw landed after reading this in the NYT:

The lead investigator for the presidential panel investigating the BP oil spill said on Monday that he had found no evidence of shortcuts taken to save money by anyone involved in drilling the doomed well.

Excuse me? No evidence?!? It's one thing to say that the totality of the evidence favors the conclusion that BP did not trade safety for dollars, but that there is no evidence that BP did so is absurd on its face. You'd have to be living in a cave for the last six months to not see evidence that BP cut corners to save money. For example, this is from the Wall Street Journal, hardly an obscure source, nor prone to publish unfair attacks against big businesses:

A Wall Street Journal investigation provides the most complete account so far of the fateful decisions that preceded the blast. BP made choices over the course of the project that rendered this well more vulnerable to the blowout, which unleashed a spew of crude oil that engineers are struggling to stanch.

BP, for instance, cut short a procedure involving drilling fluid that is designed to detect gas in the well and remove it before it becomes a problem, according to documents belonging to BP and to the drilling rig's owner and operator, Transocean Ltd.

BP also skipped a quality test of the cement around the pipe—another buffer against gas—despite what BP now says were signs of problems with the cement job and despite a warning from cement contractor Halliburton Co.

Words fail me. What possible reason could there be to cut corners like this other than to save money? I thought the Obama administration was going to put an end to this kind of brazen denial of reality.

I've never been much of a fan of the theory of reincarnation. As far as I'm concerned, I am my memories and experiences, so it is simply non-sensical to say that "I" can be reborn without them. Which makes this story an interesting read. I can't offhand think of a way to rule out the possibility that memories from other lives are somehow stored in a cosmic backup repository. After all, at the quantum level, the subjective feeling of existing at a particular time and place is as much of an illusion as the seemingly inarguable (but nonetheless false) proposition that there is only one classical universe. (In fact, quantum mechanics predicts that classical information cannot be destroyed, which renders reincarnation merely an engineering problem of extracting the bits from the thermal background.)

In one creation story, God splits off a portion of itself, names it Maya, and asks to play a game. 'What kind of game?' asks Maya. 'I don't know, that's what you're here for.' replies God. Maya thinks, and finally says 'Okay, but I need three things; A universe made of time-space, a small wet planet, and a machette.'

So God makes these things, and says 'Now what?'

'Close your eyes.'

As God does, Maya brings down the machette, splitting God in two. Then slashes again, and again, chopping God into a billion bloody chunks in less than a moment. She picks up the parts and starts dropping them into the Universe, and as she does they transform into birds, people, oak trees, blades of grass... every possible form of life. And she says 'Okay, here's the game; your goal is to remember who you are and figure out how to put yourself back together.

'Go.'

This idea is developed at some length in this book by Alan Watts. Worthwhile reading for the insight it provides into eastern religions.

Sunday, November 07, 2010

Apple's current lineup of personal computers is damned annoying. On the one hand, they are beautiful machines, and OS X totally rocks. On the other hand, Apple is clearly moving towards servicing the consumer market at the expense of the needs of power users. It has discontinued the XServe, and slowly but surely eliminated any way to attach high-speed external disk drives. The only Apple computers that can connect to an ESata drive today are the Mac Pro and the 17-inch MacBook pro, and even that requires a third-party PCI Express card.

It would seem, then, that the FirmTek SeriTek/SpyderHUB would be just the thing. It's a small, lightweight, inexpensive ESata-to-Firewire800 bridge. FW800 is not as fast as a direct ESata connection, but it's easily twice as fast as USB 2.0, which is the only other way to attach an external disk to most Macintosh computers nowadays.

Unfortunately, the SpyderHub has two really annoying design features, and one extremely serious problem.

The first annoying design feature is that it does not support hot-swapping. So if you want to unplug one ESata drive and plug in different drive you have to power-cycle the SpyderHub. Because the SpyderHub gets its power from the FireWire port and has no external power switch, this means you have to unplug the FireWire cable and plug it back in.

The second annoying design feature is that to switch between RAID modes you have to push a button on the front of the unit. To switch modes you have to press the button, release it, then press and hold it down for a few seconds. This is to prevent accidentally switching modes while disks are connected, which is good, but I can easily envision someone having a heart-stopping moment if they accidentally push the button during a momentary lapse of clarity thinking that it's a power button or a reset button or something like that. It would have made a lot more sense IMHO to have the mode selector be a switch mounted on the BOTTOM of the unit, preferably alongside a power switch. That would have made it even more difficult to accidentally switch RAID modes while disks are mounted.

But the most serious problem with the SpyderHub is that it only works with "direct connect ESata enclosures." This means an enclosure that has ONLY an ESata port and no other ports. Most notably, it won't work with an enclosure that has a USB port, which is >90% of the enclosures on the market. Worse, the failure modes are intermittent. The SpyderHub will appear to work properly -- mine seemed OK for days at a time -- but then it will fail. In my case, the failure mode took the form of a FireWire bus hang, which I was able to recover by simply unplugging the FireWire cable. I think I was very lucky that I suffered no data loss.

For me, this limitation makes the SpyderHub virtually useless. I have no "direct connect" enclosures, and the few that I have been able to find actually cost more than enclosures that have FireWire800 already built in. I have no idea what the FirmTek folks were thinking when they designed the unit with this constraint. This one bug changes the SpyderHub from a must-have device for Mac owners who care about performance to an all-but-useless boondoggle. And the fact that the failures are intermittent, combined with FirmTek's failure to clearly warn about this in their marketing materials, makes the device downright dangerous. (For the record, when I complained to FirmTek about this after discovering the problem they eventually agreed to give me a refund, less a 15% restocking fee.)

I really hope that FirmTek (or someone) comes out with a new version of the SpyderHub without this constraint. I have a bunch of fanless ESata/USB enclosures that I can now only use in USB mode, which makes them three times slower than they were when I could connect them directly to my old MacBook Pro through a PCI Express ESata adapter. I generally like my new 13 inch unibody MBP, but the fact that I can't attach a fast external hard disk just drives me bananas. It's like having a Porsche with governor that keeps you from going faster than the speed limit.

Wednesday, November 03, 2010

I blogged a while back about a pernicious intermittent problem with our internet connection that has been going on for months. To my surprise, someone from Comcast posted a comment on that post that offered to help, and yesterday, finally, after three months and I don't know how many service calls the problem was finally fixed, at least as far as I can tell. (With intermittent problems you never know for sure.) The cause turned out to be fairly prosaic: a bad modem.

In the process of dealing with this issue I learned a lot about how Comcast operates and got a small glimpse into their corporate culture. Somewhat to my surprise I discovered that the company has a lot of people who actually care about making their customers happy, but the company seems to go to extraordinary efforts to hide these people from their customers. I probably would never have met any of them had I not blogged about my frustrations. In retrospect, this is not too surprising. Comcast is a big company. It would probably be an understatement to say that not all of their customers are technically competent or even reasonable. They are probably as frustrated by the number of calls they get for problems where rebooting the computer is the right answer as we geeks are at being told for the bazillionth time to reboot our computers.

Where their system broke down, though, in my case was in not recognizing that it was stuck in a loop. I would call, they'd send a technician out, he (they were all men) would be unable to reproduce the problem (because it was intermittent), he'd fiddle with something, report back to the central office that the problem was fixed (because as far as he could tell it was), and then I'd have to start all over again from square one. The only reason the problem got fixed at all was that I blogged about it, and I was able to figure out a way to reproduce it, which I was only able to do because I know a lot about how the internet works. If I were an ordinary consumer I'm not sure I could ever have gotten it fixed.

There is, it seems to me, a pretty simple solution for this problem: provide some kind of mechanism for the customer to weigh in on whether or not a problem has been fixed rather than letting the technician make this call. Then after two or three service calls where the customer says the problem still exists, escalate up to the people who actually know what they are doing instead of just following the usual scripts. That simple measure would have been the difference, for me, between perceiving Comcast as a company that deserves their legendary reputation for bad customer service, and my current impression of it as a company that mostly does a pretty good job but has one or two broken processes.

If anyone from Comcast is reading this, I'm available for consulting :-)

An old friend of mine from LA has moved to a new neighborhood (or maybe it's another planet) that has been overrun by zombies. The stories of life there are really, really funny. Highly recommended. Read it bottom-up.

I have been bothered for a very long time by the fact that on the one hand there seems to be a very convincing argument that there is something wrong with David Deutsch's theory of shadow photons, but on the other hand if you look at the math there seems to be nothing wrong. This is a distinctly different situation from the usual suspects of quantum mysteries where the popular account is just flat-out wrong. In this case, as far as I can tell (because I am not an expert), the math really does seem to describe a world where shadow photons exist.

I had a brief correspondence with Deutsch about this, and this was his response:

An analogue of your suggestion about universes is that photons cease to exist after they have passed the Earth, so that we can never catch up with them, heading in directions in which they will never strike anything.

I think it is actually arguable that such photons indeed do not exist. John Cramer's transactional interpretation of quantum mechanics (TQM) actually argues exactly that, and relies on the big bang singularity as the "absorber of last resort" to insure that it is not possible for any real photon to travel "in a direction where [it] will never strike anything." But the validity of TQM is far from certain. It's considered pretty unfashionable nowadays.

I think I've found another way out of this conundrum, but like anything having to do with QM it's a little weird. So in the spirit of such things I invite you to consider the following claim:

Darth Vader is Luke Skywalker's father.

Is it true? Of course it depends on your point of view. If you suspend disbelief and look at it from the counterfactual perspective of the Star Wars universe, then yes, it is true. But if you do not suspend such disbelief and look at it from the point of view of the "real" universe, the answer is no because neither Darth Vader nor Luke Skywalker actually exist.

Trick is, what we so glibly refer to as the "real" universe doesn't "actually" exist either. It "emerges" from quantum mechanics through decoherence, but classical reality is only an approximation to the "real" underlying truth. But here's the rub: we ourselves inhabit this approximation and I don't mean that in a metaphorical way. We humans are classical entities. The computer that you are reading this essay on is a classical entity. The information that comprises this essay and the patterns of activation in your neurons that reading this essay gives rise to are all classical entities. When we talk about "reality" we have no choice but to suspend disbelief at least to certain extent, because if we really peel back the curtain all the way, we vanish.

And it's not just the quantum curtain that we have to leave in place in order to function. The reality we perceive is actually several layers removed even from fundamental classical reality. For example, we perceive ourselves to have (more or less) solid bodies. But the "real" truth is that the atoms in our bodies are mostly empty space, and what we perceive as solidity is "really" clouds of electrons jealously guarding their territory by means of their mutual repulsion. Then there are cognitive disconnects with "reality" that manifest themselves as optical illusions, delusions, sensory blind spots of various sorts, etc. etc. etc. Then there are subjective experiences that are only accessible to you. Does chocolate "really" taste good? How about sushi? Are you "really" in pain, or is it all just "in your head"?

Note that I am not arguing for metaphysical relativism here. It is not true, as some imagine, that you can remake "reality" (whatever that means) simply by visualizing a better future or some such new-age claptrap. What I am arguing for is that there are different kinds of reality. Reality is not one monolithic thing. Reality is layered, with one layer emerging from the one below. Classical reality emerges from quantum reality. Chemistry emerges from physics. Life emerges from chemistry. Brains and other data processing devices emerge from life. Memes emerge from brain. Mega-memes emerge from collections of brains.

Whether a proposition is true, or even meaningful, depends on which of these layers you choose to operate on. In the meme layer, Darth Vader is Luke Skywalker's father. In the classical reality layer, Darth Vader and Luke Skywalker do not exist (and hence the question of paternity is meaningless).

Many philosophical conundrums can be resolved by being explicit about which layer of reality you're operating on. At the quantum layer, shadow photons "exist". (I put "exist" in scare quotes here because photons, shadow or otherwise, don't "really exist" at the quantum layer.) At the classical layer, they don't. At the subjective layer, we have free will. At the chemical layer, we don't.

There. I have just singlehandedly solved mankind's most intractable problems. Seems like a good day's work. I'm going to go get some lunch.

Monday, October 25, 2010

I debated with myself for a long time over whether to write this post (which is one of the reasons some of the subject matter is a little old). I like Paul. I read his essays. I agree with most of them. I think Y-Combinator is a great achievement. I've invested, directly or indirectly, in about a dozen YC companies. I've even made some money doing it. And Paul's influence is now such that getting on his shit list can be a career limiting move. But some of the things Paul has said lately I find a bit disturbing. So I decided to go ahead and write this because, if nothing else, it will serve as a test to see if the Silicon Valley culture really does tolerate disruption as well as it likes to think it does.

That said, here are the five things I think PG is wrong about:

1. Efficiency doesn't matter

Paul has argued that machines have gotten so powerful that the efficiency of the programming language you use doesn't matter. And of course he's right about that to a certain extent: efficiency doesn't matter at first. But when you start to get traction, efficiency starts to matter a lot, and the more successful you are the more it matters. If you've done it right then you have machines doing most of your work. If you have machines doing most of your work, then the larger you grow the more the cost of those machines will come to dominate your expenses. Those costs are inversely proportional to your efficiency. If your code runs twice as fast you will only need half as many machines. All else being equal, those savings are pure profit.

Note that I am not arguing for premature optimization here. Premature optimization is still the root of all evil. But it's important to keep in mind that the aphorism of "efficiency doesn't matter" has a limited domain of applicability, and your goal, if you're starting a business, is explicitly to get out of that domain. If you've been in business for a while and efficiency still doesn't matter you have almost certainly failed.

2. The returns on angel investing are bimodal

Paul claims that a startup either wins big or fails, and that therefore if you're going to invest you should invest in as many companies as possible in order to increase your odds of picking the one big winner. He writes, "The expected value of a startup is the percentage chance that it's Google." We had all better hope that this is not true, because Google-sized wins only come along once every few years at most. In the meantime, 700,000 new businesses are incorporated in the U.S. every year. There had better be a couple of those non-Googles that produce a decent return for their investors or the country is in big trouble.

I've been angel investing for five years now. I have a net negative return because of one spectacular failure (from which I have learned a lot but that's another story). But if you discount that as an outlier, my net return is positive, and all of my winners so far have been small: 10x return or less. The key, as Paul seems to have recently discovered, is time. What matters is not absolute return, but return amortized over time. I'd much rather have a 10x return in one year than a 100x return in three (or five or ten, which are more typical numbers).

It is true that VC returns have historically been bimodal, but this is not inherent in the nature of startups, it's because VC's engineer the environment to force the distribution to be bimodal. They do this because they are constrained by the structure of their funds to move money in and out on a particular schedule. They are usually not free to reinvest the proceeds from an early small win into a new startup that might produce another fast small win. Because of this, if a VC cashes out early, that capital can no longer work for them. So they use their influence to force companies to continue to grow past the point where they otherwise would have. This in turn forces the companies to take on additional risks that they otherwise might not have, which causes them in many instances to fail.

Angels do not operate under these constraints, and so they can make a very nice overall return on small wins with fast turnaround. To be fair, Paul did grudgingly admit this possibility in his talk at the most recent startup school, but he doesn't seem to have thought the consequences all the way through. In particular, Paul still claims that:

3. Valuations don't matter

This is the one that worries me the most because the issue has been in the news lately, and because it is so plainly false. To see that it is false you only have to take it to an extreme: Would you invest in a YC company at a ten billion dollar valuation? Clearly not. So somewhere between zero and ten billion there is a line beyond which the expected return no longer has a high enough risk premium to make the investment worthwhile. One can reasonably argue about where that line is, but there are only four orders of magnitude between the $1M valuation that YC companies typically commanded not so long ago and the $10B which is clearly over the line. The last round of YC companies was getting $10M valuations, an order of magnitude over a few years ago, under the valuations-don't-matter mantra. You can only do that trick three more times before you get to $10B. Somewhere between here and there valuations must start to matter.

4. Investors who don't want to be the first movers are "assholes"

The exact quote (captured on video, about twelve minutes in) was, "You start with the committed ones, the nice guys who say, 'yes I'm absolutely in,' and work your way outwards to assholes who give you lines like 'come back to me to fill out the round.'" I have on occasion been one of those assholes, and I take umbrage.

I can certainly understand why a founder would find a line like that annoying. But calling such people "assholes" crosses a line and implies a dishonorable motive, which I think it grossly unfair. To invest in startups as anything other than a hobby is a boatload of work. Notwithstanding what I wrote above under #2, the sad fact of the matter is still that the vast majority of startups never achieve profitability. (I'm talking here about real profitability, of the sort that can provide a positive return to investors after all the company's employees start making reasonable salaries. "Ramen profitability", which YC companies like to advertise, simply means that the company is being subsidized by its employees. This is not a recipe for long-term success.) There are ways that you can improve the odds, even stack them in your favor, but they are, as I've said, a ton of work, and very, very hard to learn. Particularly for a new investor, following the lead of more experienced investors rather than just shooting from the hip can be a very reasonable strategy. And not just because it improves your odds, but also because experienced investors pay more attention to people who have co-invested with them. So even if you're treating your investments as an educational expense and not really looking to make money, it can still make sense to ask who else is in on the deal before you write a check.

So on behalf of reluctant angels everywhere I say to founders: cut us some slack. Many of us are still trying to figure this out as we go along just like you are.

Watching that video again reminded me:

5. You don't have to take notes

At the start of his talk at startup school PG admonished the audience not to take notes because a written version of his talk would be available on line and it would certainly be a higher-fidelity rendition of what he said than anything they could scribble in real time. First, it isn't actually true. The written version of Paul's talk is an edited version of what he said. The "asshole" comment, for example, doesn't appear. But more importantly it makes a false assumption about the purpose of taking notes. Taking notes serves not only to make a non-volatile record of what was said, but the act of writing helps you remember what was said. Writing activates different parts of your brain than speaking. The act of rendering words to a page and feeding those words back through your eyes rather than your ears actually helps you remember things. So taking notes can be worthwhile even if you never go back to look at them. And last but not least, if you take notes, you can write down your real-time reactions to what is being said, which obviously no one but you can do.

[UPDATE] This entry was, unsurprisingly, posted on Hacker News. The top-rated comment is a brief response form PG. For the record, I concede that I was being unfair in point #5. PG did not say not to take notes, he just said that people didn't *have* to take notes if they chose not to because a transcript would be available. To the extent that I have misrepresented or misunderstood PG's positions on this or the other points I raised, it was not deliberate.

Saturday, October 23, 2010

It's unfinished and I've only read about half of what is there, but I'm ready to declare "Stop me before I vote again" required reading for anyone who wants to understand contemporary politics in the U.S. If nothing else, it's a model of lucid, clear writing. Fair warning though: the picture it paints ain't pretty.

Thursday, October 21, 2010

... when I get on the plane, I got to tell you, if I see people who are in Muslim garb and I think, you know, they are identifying themselves first and foremost as Muslims, I get worried. I get nervous.

(The elided portion was the obligatory "I am not a bigot" disclaimer.)

I wonder if I would get fired from my job because I said that seeing people covering their face in public creeps me out.

For the record (just in case any potential employers are reading this), I get creeped out when anyone covers their face in public when it's not Halloween. Man, woman, Muslim, Zoroastrian... I am an equal opportunity cynic when it comes to people being unwilling to show their face in public. The reason is very simple: I grew up in Western culture, where covering your face is done almost exclusively in order to conceal your identity in preparation for the commission of a crime, or, occasionally, simply to scare people. Covering your face in public in Western culture is something that Just Isn't Done. It's just as shocking, perhaps even as offensive, as wearing a bikini in public would be in a conservative Muslim culture.

In fact, that's not a bad analogy.

[UPDATE:] William Saletan over at Slate has, as usual, some worthwhile perspective.

Saturday, October 16, 2010

Someone sent me this by email. They've given me permission to publish it anonymously:

1) Another weird (fake) religion that reminds me of the flying spaghetti monster is http://tarvu.com/ The humor is more dry, I actually had to ask "is this a joke?" when I first saw it. Which, to me, makes it a more humorous one.

2) The other thing that I thought of is that Anton LaVey's brand of Satanism and probably many other "new age" religious practices might already satisfy quite a few of your qualifications. From what I remember LaVey's goal with Satanism was to give people rituals and faith, but one which didn't allow for belief in a deity. It seems like he had some of the same goals you do, namely finding a replacement for religions like Christianity that would throw out the things he saw as bad about them (such as belief in deities) without throwing out what he saw as the benefits of organized religion (such as ritual, community, comfort, etc.).

I chose to email rather than comment because I felt weird about bringing up Satanism in a more public forum. I'm not a Satanist, but I have read a little about it. I that also means that I may not have the most accurate understanding of it. Anyway, it just seemed like the conversation was mostly concerned with the really huge religions of the world and I'd be interested in how it applies to some of the more fringe groups. Even things like Scientology which is another very deliberately designed religion.

This was my response:

The problem with joke religions is that they are jokes. And the problem with satanism is that it evokes an even more negative visceral reaction in people than atheism.

The cool thing about Loki is that religious people wouldn't really know what to make of him. He's a "real" (Norse) god, so he's not a joke. He's obscure enough that he doesn't come with baggage like satan does. (The mere fact that you felt the need to make this communication private is an indication of just how much baggage satan has.) And he has an actual constructive message: be skeptical, because I might be playing a trick on you.

Tuesday, October 12, 2010

Like all good designs, it needs to start with a goal, a set of design criteria. You can't design something unless you know what it is you want to accomplish. The goal here is to design a constructive myth, one whose effect on people will be positive by some quality metric. Which metric? Ideally the myth should cause people to behave more rationally. (Is it possible for a myth to cause people to behave rationally? Yes, I believe it is. Keep reading.) Failing that, it should at least allow the community to deflect some of the criticism and discrimination that we presently endure.

It should be a moderate myth, implausible enough to make it unlikely to foster fanaticism, but serious-sounding enough to make it socially unacceptable to dismiss it as a simple parody. Ideally, it should be an old myth, because humans -- especially religious ones, whom we are trying to reach -- venerate history.

Happily, some of our ancestors were prescient, and there is an extant myth that fits the bill. (This is a good thing because inventing a good myth is not at all easy.) It is the myth of Loki or the Trickster, practical joker to the gods, or, if a different kind of gravitas is called for, evil super-villian to the geeks.

The beauty of tricks is that they foster skepticism. The beauty of Loki is that he can be used to defuse fanaticism. If someone says, "I know this because God told me," we can respond, "No, you only think it's God. It might be Loki playing a trick on you." Note that the goal here is not to persuade the fanatic (that is not possible), merely to humble him and defuse the argument. As long as we maintain some plausible deniability that we might really believe that Loki is out there playing tricks on us the rhetoric is unassailable because it has the exact same basis as the rhetoric of the fanatic. The fanatic can no longer resort to playing the godless card. We have a god. He is Loki. And he can work in your life the exact same way that other gods do. But unlike other gods who foster dependency and submission, Loki fosters skepticism and self-reliance, because Loki is not on your side. Loki is the enemy, forever trying to trick you, to lure you from the truth. But the good news is that you are more powerful than he is, and if you arm yourself with the right tools and training you can defeat him.

To believe in Loki is, in a wonderfully paradoxical way, to be a skeptic, to doubt. And doubt is the seed from which rationality grows. Doubt is the ultimate weapon -- indeed the only effective weapon -- against fanaticism and fundamentalism. Doubt is the salvation of the world.

I hope you will all help spread the Word.

[UPDATE] I see that this post got a "bogus" vote. If you think this is bogus I would really appreciate if you would leave a comment explaining why you think it's bogus.

During the height of the kerfuffle over the so-called ground-zero mosque many American Muslims raised the question of whether they would ever be fully accepted in American society. That question still seems to be hanging in the air, so I though I would take it upon myself to answer it.

Dear American Muslims:

The answer to your question is yes, sooner or later you will be accepted, but it may take a long time. You have to understand there are some features of American culture that are fundamentally at odds with certain aspects of your faith.

First and foremost, where religion is concerned we Americans are shameless hypocrites. Many of us loudly proclaim America to be a God-fearing country, but our real national religion is capitalism. If there is ever a conflict between religion and commerce, commerce wins. So, for example, we have never taken the second commandment very seriously. You may have noticed that depictions of Jesus are everywhere. So your strictures against depictions of the Prophet (PBUH) are fundamentally at odds with our culture. Before you can be accepted, one or the other is going to have to give. If you look at history, the assimilation process happens faster if the group being assimilated adapts to the culture rather than insisting that the culture adapt to it.

While I'm on the topic of commerce being the national religion, praying five times a day is widely viewed as being a little over the top. An exceptionally pious American (of any faith) goes their house of worship once a week. Anything more than that is viewed with suspicion because it's too significant an impact on productivity. This is true for any religion, not just Islam, but five times is day is so much more than any other mainstream religion demands of even its most ardent adherents that you really stick out. Not a good thing if you really want to fit in.

Another aspect of our culture that you need to understand is that concealing one's face is generally associated with lawlessness. In our culture, people conceal their faces not out of modesty but because they don't want their identity to be known. The visceral reaction to seeing someone, male or female, with their face covered in public is overwhelmingly negative. I am myself a product of four cultures (German, Israeli, Palestinian and American) so I am about as multicultural an American as you will ever meet, but seriously, seeing women wearing what looks to me like an instrument of torture over their faces creeps me out.

Last but not least there is the whole terrorism thing. The association of Islam with terrorism is tragic. It is bigoted. It is wrong. But it is, alas, not completely baseless. This is going to sound self-contradictory, but it would really help if the voices of moderation within Islam were louder. In American culture, intentional violence against innocents is flatly unacceptable under any circumstances. Yes, I know that America commits violence against innocents. As with religion, we are hypocrites, saying one thing and doing another. Yes, we have killed vastly more civilians by retaliating against 9/11 than were actually killed in 9/11 But killing those innocents was not our intent. To us, that makes all the difference in the world.

This is the crucial thing: American hypocrisy is at once a deep flaw in our character and also the glue that holds our society together. There are differences between us far greater than those that separate Shia and Sunni. But since 1865 we have not settled those differences with violence. The only way we can do that is to set aside some of our more ardent beliefs and behave as if we did not believe them. I have neighbors who are Baptists. According to their theology I am a heretic who is condemned to hell because I have not accepted Jesus as my lord and savior. But that doesn't stop us from going out to dinner and having a good time. We just don't talk about religion.

That sort of suspension of disbelief is much, much harder when your women are veiled and the call to prayer goes out over the PA five times a day every day.

By the way, it is important to notice that it is not just Muslims in America who are marginalized when their religious practices conflict with our cultural hypocrisy. Christians also suffer this fate. Fred Phelps is a pariah, not because he's a Muslim, but because he is too much of a Christian. Phelps's sin is that he takes the Bible too seriously. He is not willing to capitulate to the secular and the politically correct like, say, the Mormons have (mostly) done. But that is the price of acceptance. That is why the members of the Westboro Baptist Church are even more unwelcome than you are.

This is your dilemma: Islam as it is currently practiced seems (to my admittedly unschooled eye) to insist that you be Muslims first and Americans second. But America insists -- and has always insisted -- that Americans be Americans first and Muslims -- or Jews or Catholics or Baptists or Lutherans or Wicans or Methodists -- second. The price of being accepted in America is accepting others whose views are fundamentally incompatible with your most cherished beliefs and not getting in their face. The reason your assimilation is taking so long is that you are too principled, too pious, too unwilling to compromise Allah or the Q'uran or the Prophet (PBUH).

And if you find this letter at all offensive, well, that would be exactly my point.

I do not deny that there is a connection between religion and extremism. It is certainly true that once you start to accept things on faith, that opens up a crack in your thought processes through which all manner of things might slip. The whole premise of this discussion is that this phenomenon is real, it's dangerous, and something has to be done about it. The question is: what?

Your answer is to simply stand up for Truth, Justice and the Rational Way. It's a noble sentiment. I sympathize. I really do. But there's a problem: it doesn't seem to be working, at least not here in the United States, and certainly not in the Middle East. And even in the places where it does seem to be working, like Sweden and Japan, it's not because of the efforts of the CSI. I don't know why Sweden and Japan are so good at resisting irrationality, but do observe in those cultures a certain civility and decorum that seems to be absent in the writings of Harris and Hitchens.

Looking at the situation as well from the point of view of tactics and politics I further observe that the world has far fewer qualms about being politically incorrect towards atheists than any other group defined by a set of belief. (I was about to add, "with the possible exception of pedophiles," until it occurred to me that even pedophiles have managed to deflect an awful lot of political and legal arrows by donning the mantle of faith.) Empirically, if-you-can't-beat-em-join-em seems to be an effective strategy with respect to certain quality metrics.

You are of course correct to warn about the slippery slope and the danger of -- if you'll forgive the metaphor -- selling your soul to the devil by embracing myth as a political tactic. And here we get to one of the really crucial issues: to what extent are people capable of compartmentalizing their beliefs? I think humans have a great capacity for this, and I think you actually recognize this too, except you call it "hypocrisy." I call it suspending disbelief, and it can be a useful skill. It takes an exceptionally strong person to face the cold hard truth about the world and not sink into despair, because the truth is that for many people in many ways, life sucks.

What I propose is to design a sort of mythological methadone to get people off the religious heroin they are currently consuming. The challenge is to come up with a myth that serves the purposes of mythology without being quite so addictive and debilitating as what is currently in circulation.

Actually, there already is an atheist myth making the rounds: the flying spaghetti monster. The problem with the FSM is that it was specifically designed so to make it clear that no one actually believes in it, and so as a myth it is self-undermining. It does not serve the purposes of myth. Its only purpose is to ridicule the very concept of myth, and so it actually makes the situation worse. In the religion-as-drug metaphor, the FSM is like a candy cigarette, and about as effective.

And yes, I do have a concrete proposal. I'll post it later today. (No, it is not the Great Conspiracy.)